March 2013

FIGURE 2.6

Report on the assets and liabilities of the defunct local authorities, March 2013

Source: IGRTC 2018.

published in November 2018 (IGRTC 2018) (see figure 2.6). This report is a significant achievement, despite noted shortcomings, because this is the first report that presents an aggregated picture of Kenya’s county assets and liabilities. However, this does not include the assets acquired or liabilities committed (or generated or became overdue) after the induction of the county governments in 2013. And it remains unclear whether some verified assets were inherited or built after March 2013 (extension of schools, hospital wards, roads, and so on), because many of those were hardly separable from the inherited assets during field verification four to five years after induction of the new county governments. The report does not include references to such extended or new assets, and the CALC reports are brief about the technical details of assets (for example, school buildings recorded without specifying number and size of classrooms or amenities).

Furthermore, it is important to note that this report does not cover the assets and liabilities that various national government entities by law had been mandated to hand over to counties, because neither the TA nor IGRTC had yet commenced the verification and handover of these assets and liabilities. Instead, IGRTC stated, “The verified and validated inventory was expected to include not only the assets and liabilities of the defunct local authorities, but [also assets and liabilities from] ministries, departments, state corporations, and agencies.” (IGRTC 2018, 1). In this section we briefly analyze and summarize the main results, challenges, and issues and draw lessons on transition based on the IGRTC 2018 report.

The report covers assets and liabilities the defunct local authorities (DLAs) possessed at closure on March 27, 2013. The main categories include (1) fixed assets, including land, buildings, motor vehicles, computers and accessories, furniture and fittings, plant and equipment, biological assets, and project works in progress; (2) financial assets, including investments (shareholdings and fixed deposits) and current assets; and (3) financial liabilities, including main groups such as loans or bank debts, emoluments, statutory deductions, commercial or trade creditors, and legal fees. The analysis aims to reflect the situation as of March 27, 2013, with a few exceptions, including noting that some liabilities were paid by August 31, 2018, and listing and noting projects in progress on March 27, 2013. Finally, the report does not provide an aggregated value of analyzed county assets and liabilities, because CALCs were not mandated to estimate the present value of assets and liabilities. We summarize main attributes and key findings from the report by asset groups in the following sections.

Land Land is undoubtedly the most important asset of local governments because land holds or provides geographic space for buildings, plants, and infrastructure. It is also important because counties own undeveloped land parcels, some of which are surplus and ready for strategic divestiture, which has been a major source of funding infrastructure in most countries. Following this principle, the IGRTC report starts with and puts high emphasis on inherited land. The CALCs did a great job and identified 62,342 parcels of land, which is 50 percent more than the number of parcels in the TA list; moreover, of these parcels only 3,106 parcels (or 5 percent) are listed as disputed. A shortcoming of the survey, however, is that the committees have not verified the size of parcels. Due diligence at field verification would have required verifying, or if verification were not possible, at least estimating an approximate size of each parcel to secure ownership and constrain further grabbing or encroachment by such records. For instance, a 2.0-hectare land parcel (inventoried in 2018) may appear to be only 1.2 hectares as time goes by; the parcel remains there but land still can be lost by encroachment.

One important exception on land measurement is that the NCC government conducted a complete land identification and valuation exercise under the Nairobi Metropolitan Services Improvement Project of the World Bank in 2017–18 that identifies, locates in digital maps, and records the size of all land parcels in the NCC jurisdiction (details are discussed in the NCC case study in part II). This new land database identifies both private and public land, including land parcels owned by NCC and community land, but also other public land possessed by various national entities. Moreover, this mass valuation exercise also provides an estimated market value of land at a 2018 price. Two other counties (Bomet and Kiambu) have commenced land valuation for tax purposes, and